5 Tips To Help You Manage Student Loan Debt
Moving Beyond The Challenge Of This Tremendous Financial Burden
By: Stacey Tisdale
The numbers are increasingly alarming – student loan debt is spiraling out of control. Some 45.3 million people now owe $1.7 trillion, with borrowers in debt by an average of $37,691 each. A spike in unemployment due to the coronavirus pandemic fueled the largest increase in the total student loan debt balance since 2013.
As of the first half of 2020, 11.2% of adults with student loan debt reported they were unable to make at least one student loan payment. The Cares Act, the sweeping stimulus legislation, offered some relief—suspending payments on federal student loans owned by the Department of Education from March 2020 to September 2021 and dropping interest on these loans to zero percent. This administrative forbearance did not cover private student loans.
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Paying off student loans is wreaking havoc on borrowers’ lives. A 50-state survey created by two organizations, Summer and Student Debt Crisis, found that a vast majority of people with student debt are delaying marriage, home ownership, having children, and saving for their retirement as a result of what feels is an insurmountable debt burden.
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Struggling with the Stress of Paying Back
In the detailed report aptly titled “Buried in Debt”, 65% of borrowers reported having less than $1,000 in the bank. A whopping 88% of borrowers say they are struggling to make their high monthly payments, with nearly two-thirds reporting their student loan bill is higher than their monthly food allowance. It’s not surprising then to learn that 86% of the borrowers surveyed in this study consider their student loan debt to be a “major source of stress.” And one in three report student loan debt was the #1 stress in their lives.
5 Tips to Help You Manage Student Loan Debt Stress
While your student loan debt is stressful, here are 5 tips to help you manage the stress – as you manage your debt.
Take action! Remember there are things you can do to lower your debt, which will lower your stress. Look at refinancing with a private bank, which can offer lower interest rates, longer payback terms, and special options like an interest rate tied to your grades.
Find alternative programs that will pay your debt for you in exchange for a commitment to work for a specific number of years. More companies are offering these programs and there are numerous public service opportunities that will reimburse college costs for a future position.
Look to see if you qualify for the Temporary Expanded Public Service Loan Forgiveness, passed by Congress in 2018. This offers debt forgiveness to a borrower who makes 120 payments over a 10-year period. Complete an application here.
Be good to yourself! Take a tip from young adults, aged 18-27, who were found to feel empowered by their student loan and credit card debt, according to a new research study. “Debt can be a good thing for young people – it can help them achieve goals that they couldn’t otherwise, like a college education,” said sociologist Dr. Rachel Dwyer of Ohio State University
Debt doesn’t make you a bad person! If the stress becomes overwhelming and the situation feels hopeless, reach out and talk to someone and explore together what options for help you might not know about.
Bottom line, a higher education is often the cornerstone of success. A college or graduate degree can open the door to a higher paying job, the salary you can make, and the goals you can achieve. But before taking on student loan debt, shop around for the best rates and payback options you can find. With private banks back in the student loan business, competition should help keep interest rates lower.
